Electronic bill payment has replaced many paper bill payments. While it used to be common practice for people to pay a bill by writing a paper check and mailing the check to the payee, it is now common for people to pay bills through on-line banking systems. Typically, a person visits the web site of his or her bank, or that of the payee, and initiates a payment. The payment is then scheduled for a certain date, at which time the amount of the payment is deducted from the person's bank account (or other source of funds), and credited to the payee's account. This process represents an efficiency for both payers and payees. The payer typically saves time relative to writing and mailing a paper check, and also saves the cost of postage. The payee typically saves the cost of processing paper payments, since receipt of electronic payments is a process that is largely automatable.
Electronic payments are typically processed through third-party processors. Thus, when a person initiates an electronic payment through his or her bank's web site, the bank often does not process the payment directly, but instead arranges for a payment processor to process the payment. The bank or other financial institution typically pays fees to the payment processor for handling payments. (The fees may be on a per-payment basis, or there may be another arrangement.)